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The private value single item bisection auction

Elena Grigorieva, P. Jean-Jacques Herings, Rudolf Müller and Dries Vermeulen
Economic Theory
Vol. 30, No. 1 (January 2007), pp. 107-118
Published by: Springer
Stable URL: http://www.jstor.org/stable/27822463
Page Count: 12
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The private value single item bisection auction
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Abstract

In this paper we present a new iterative auction, the bisection auction, that can be used for the sale of a single indivisible object. The bisection auction has fewer rounds than the classical English auction and causes less information to be revealed than the Vickrey auction. Still, it preserves all characteristics the English auction shares with the Vickrey auction: there exists an equilibrium in weakly dominant strategies in which everyone behaves truthfully, the object is allocated in accordance with efficiency requirements to the buyer who has the highest valuation, and the price paid by the winner of the object equals the second-highest valuation.

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